NEW DELHI: Union Finance Minister Nirmala Sitharaman unveiled the Union Budget for the fiscal year 2026-27 on Sunday, navigating a backdrop of escalating global uncertainties, particularly concerning tariff policies from the United States. The budget outlines a distinct dichotomy, delineating items poised to become more affordable for consumers and sectors likely to experience financial strain.
Budget 2026-27: Key Highlights and Economic Context
Presented amid volatile international trade dynamics, the budget sets a capital expenditure target of Rs 12.2 lakh crore for FY27, signaling the government's commitment to infrastructure development. The proposals aim to stimulate domestic industries while addressing compliance and tax arbitrage concerns, reflecting a balanced approach to economic management.
Products and Sectors Set to Become More Affordable
In a move to alleviate costs for consumers and boost specific sectors, the government has introduced measures to reduce expenses through policy support, duty-free imports, and customs exemptions.
- Sports Equipment: Sitharaman announced the launch of the 'Khelo India Mission,' a decade-long initiative designed to transform the sports sector by fostering employment, skill development, and job opportunities. "The Sports Sector provides multiple means of employment, skilling, and job opportunities. Taking forward the systematic nurturing of sports talent set in motion through the Khelo India programme, I propose to launch a Khelo India Mission to transform the Sports sector over the next decade," she stated. This initiative is expected to enhance the availability and affordability of sports equipment.
- Leather Goods: The finance minister proposed duty-free imports of specific inputs currently available for exports of leather or synthetic footwear, extending this benefit to exports of shoe uppers as well. This measure aims to reduce production costs and support the leather industry.
- Cancer Medicines: To provide relief to patients, particularly those battling cancer, Sitharaman announced a customs duty exemption on 17 drugs or medicines. Additionally, she proposed adding 7 more rare diseases to the list for exempting import duties on personal imports of drugs, medicines, and food for special medical purposes, easing the financial burden on affected individuals.
- Seafood: The Centre announced duty-free fish catch beyond territorial waters, a step intended to support the fishermen community and potentially lower seafood prices for consumers.
Areas Likely to Face Increased Costs
Conversely, the budget introduces measures that could raise expenses in trading and certain corporate financial activities, emphasizing a stricter stance on tax compliance.
- Trading and Corporate Distributions: Trading activities and some corporate cash-distribution channels may become more expensive due to proposed changes to buyback taxation, the securities transaction tax (STT), and tax collected at source (TCS) on selected goods. These adjustments underscore the government's drive to limit tax arbitrage and tighten compliance, potentially impacting investors and businesses engaged in these areas.
Broader Implications and Economic Strategy
The budget's dual approach reflects a strategic effort to balance consumer relief with fiscal discipline. By lowering costs in sectors like healthcare and domestic manufacturing, the government aims to boost economic growth and social welfare. Simultaneously, the tightening of tax regulations on trading and distributions seeks to enhance revenue collection and curb loopholes, aligning with broader economic reforms.
As global uncertainties persist, particularly regarding U.S. tariffs, the budget's focus on domestic resilience and compliance highlights India's adaptive economic policies. The proposals are poised to influence various stakeholders, from patients and producers to traders and corporations, shaping the economic landscape for the upcoming fiscal year.
